I am bullish on Disney (NYSE: DIS) as it has a very strong moat, solid long-term growth prospects, and general bullish sentiment from Wall Street analysts.
Disney is a company headquartered in Burbank, California, and was founded in 1923.
It is one of the biggest media and entertainment conglomerates and operates in various segments. The business segments include Media Networks, Studio Entertainment, Experiences & Products, Parks, and DTC & International.
Primarily known for its film studio division; the company works with several different production names. These portfolios of brands were created to differentiate between the services, products, and content provided by Disney.
It has more than 18 offices located in different United States cities and in 2019, the total number of employees working in the company grew to 223,000.
Strengths
Disney has been serving the mass media industry for a little over a century now. It has one of the strongest, if not the strongest hold, in its industry.
Since its inception, the company has created a robust portfolio, filled with a wide range of brands, products, services, and experiences. It is also popular around the world, which gives the company several opportunities to expand and tap into various locations.
In addition to having diversified businesses, Disney also has a proven track record of success in acquisitions. The company’s ability to provide localized experiences through its products and services worldwide makes it stand out amongst competitors.
Recent Results
In Q4 of 2021, which ended in October, Disney’s end-of-year cash, cash equivalents, and restricted cash totaled $16 billion, compared to $17.95 billion in 2020.
This decrease in cash could be related to the investment in parks, resorts, and other properties across several locations. The diluted EPS, however, increased from $(0.20) to $0.37 in Q4 2021. The total diluted EPS for the year came to $2.29, a 13% increase since 2020.
The total income reached $290 million in Q4 2021 quarter and $2.6 billion for the entire year. There was a more than 100% increase in the operating income in the quarter, while the change in operating income for the year was -4%.
Valuation Metrics
DIS stock looks reasonably priced at the moment. Its EV/EBITDA ratio is high relative to its history, at 23.3x compared to its historical average of 18.6x.
However, its P/E ratio is discounted at 38.6x compared to its historical average of 44.3x.
Wall Street’s Take
According to Wall Street analysts, DIS earns a Moderate Buy consensus based on 15 Buy ratings, six Hold ratings, and zero Sell ratings in the past three months. Additionally, the average Disney price target of $196.21 puts the upside potential at 25.3%.
Summary and Conclusions
Disney is a leader in the global entertainment industry as it boasts leading name brands and story franchises that it has effectively monetized across its theme parks, as well as its digital and physical consumer products and media.
It has also ventured successfully into sports broadcasting, Hollywood filmmaking, and even the highly competitive and rapidly growing online streaming industry. As a result, the business should enjoy strong growth for many years to come.
Furthermore, Wall Street analysts are overall quite bullish on the stock and the average price target implies significant upside over the next year.
Download the TipRanks mobile app now
Read full Disclaimer & Disclosure
